India Inc takes a fancy to donations

NEW DELHI: Donations made by the Indian companies saw a sharp jump of 60% in fiscal year 2007-08, higher than the growth in their profit. This does not mean that companies have turned philanthropic, as this includes donations to political parties too.

Reliance Industries, ONGC, Hindalco, Bharti Airtel, Jaiprakash Associates were the top five donors in the financial year 2007-08. Reliance Industries made a comeback as donor No 1 after slipping to No 2 in the previous two years — FY06 and FY07, when public sector giant ONGC emerged as the top donor. Reliance Industries was the lead corporate donor in FY04 and FY05.

Besides taking the top slot, RIL also broke the ceiling of corporate donations by any single firm in FY08, having put in money worth more than Rs 100 crore. As per an ET study of 2,700 public listed firms, aggregate donations increased 60% to Rs 800 crore in FY08 compared with Rs 500 crore in the previous financial year. During the same period, aggregate net profit of such firms rose by 25%.

Says the Delhi-based NGO Deepalaya's chief executive TK Mathew, "We have not noticed any sharp movement in corporate donations last year. At the best, it increased 10-15%. Some of the donations went out to political organisations too. Infact, this year, we have seen a drop in donations as a fallout of the economic scenario."

The last time companies donated more than the growth in their earnings was in FY05, when general elections took place and many companies came out to help the tsunami victims in December 2004. It could not be ascertained how much companies donated to political parties as they do not make separate disclosures in their annual reports.

For instance, an e-mail query sent to Bharti Airtel on the quantum of political donations made by the firm last year did not elicit any response. The spokesperson said, "The donations include Bharti Airtel's contributions to Bharti Foundation, the philanthropic arm of the Bharti Group, the prime vehicle for most of Bharti Airtel's initiatives in Corporate Social Responsibility (CSR)."

Among the top private sector firms, Bharti Airtel recorded the maximum jump in donations which rose more than five times (487%) from Rs 5.41 crore in 2006-07 to Rs 31.74 crore in 2008. As against this, its net profit rose 55% in the same period.

Many other firms reported higher increase in donations compared to growth in their net profit. These include Reliance Industries, ONGC, Hindalco, Grasim, JSW Steel, Mundra Port, Bosch, Aditya Birla Nuvo, and M&M. There were also firms which reported decline in profit and yet increased their donations such as HPCL, Dr Reddy's Labs and Raymond.